Standard & Poor's lowering the outlook for U.S. debt to negative is less the canary in the coal mine than it is another faint reverberation from a familiar echo chamber. The ratings agencies don’t know anything more than people who have read newspapers covering this issue.

There may be no fiscal crisis yet – but political gridlock could eventually be the catalyst for flight away from U.S. treasury bonds.

They don’t influence market sentiment as much as they reflect it. In saying that U.S. policy makers may not be able to meet the country’s medium-term budgetary challenges by 2013, they are not telling us anything we don’t already know.

Thus, were I to attempt to explain why U.S. stock markets tumbled, I would much rather point to the crisis in Europe (not helped by the Finnish elections over the weekend) and to China’s ongoing inflation problems.

This said, that S.&P. has again stated the obvious doesn’t make the point less important. Addressing our medium-term fiscal problem will require spending restraint, a maxim to which all political factions pay lip service even while failing to offer credible, detailed plans for turning principle into practice. It will involve bending the health-care cost curve rather than imagining that public support for health care for the poor and elderly can be made magically to go away. And it will require revenue enhancement to pay for the infrastructure and education necessary for the U.S. to compete in the 21st century.

And 2013 is, indeed, the relevant horizon. There may be no fiscal crisis now – from all appearances, the bond market vigilantes are still invisible. But history tells us that crises occur around the time of elections. And we have a big one coming at the end of 2012.

As I note in my book, "Exorbitant Privilege," the resulting political gridlock and uncertainty could be the catalyst for mass flight away from U.S. treasury bonds. If so, the dollar would crash. Interest rates would spike. Important institutional investors could be caught flat-footed. This could make the last financial crisis look like a walk in the park.

But rather than look to the rating agencies for a reminder, I say look to the so-called Gang of Six in the Senate. From all appearances, they are willing to face up the hard choices to be made, or at least to discuss them intelligently. The question now is whether more members of Congress will follow.